Subsidiaries set to miss out on simplified standards for SMEs
Calls from audit industry to ease the disclosure burden on subsidiaries
Pressure is mounting on the UK accounting standard setter to ease the
regulatory burden on thousands of subsidiaries when it brings in new standards
for small and medium sized businesses.
The UK Accounting Standards Board is about to release a discussion paper on
new accounting rules for SMEs announced last week by the International
Accounting Standards Board.
The regulations offer mid-sized businesses a set of high quality accounting
rules designed for use anywhere in the world.
Under the rules SMEs will make about 200 disclosures each year. However, for
businesses which are also subsidiaries there are more than 1,000 disclosures
which need to be considered in order to satisfy the reporting requirements of
their parent company.
Pressure is building, in part from the audit industry, to ease the disclosure
requirements on subsidiaries when the SME reporting rules are eventually adopted
by the ASB.
According to critics, subsidiaries will remain bogged down in disclosure
requirements, which serve their parent company, while their non-subsidiary
counterparts will benefit from reduced disclosures.
PwC senior technical partner Peter Holgate said the ASB should consider
easing the disclosure requirement on subsidiaries when they introduce the new
rules. ‘It would save time on the part of companies and their auditors who now
audit pages and pages of detailed disclosures that hardly anyone reads,’ he
said.
He said the vast disclosure requirements for subsidiaries had come about as,
‘an unintended by-product of standard setting’.
ASB chairman Ian Mackintosh described the issue as an area of ‘concern’ that
would be canvassed in a forthcoming discussion paper.
